WASHINGTON, June 2, 2004-The World Bank's Board of Executive Directors yesterday approved a loan of Euros 40 million for the Croatia Coastal Cities Pollution Control Project. The protection of Croatia's 1,780 km-long Adriatic Sea coastline and 1,185 islands is a priority for both ecological and economic reasons. The Project will improve coastal wastewater treatment, discharge infrastructure, and sewage expansion to address the problem of water pollution because of its negative effect on ecology, public health, tourism, fishing industries and aquaculture. Under existing conditions, wastewater management is deficient and water >pollution constitutes a problem in a number of Croatian coastal municipalities. Coverage of water supply services ranks high compared to other countries in the region. However, coverage for sewage is only around 40 percent, and less than 12 percent of all collected wastewater is being treated. The degradation of seawater quality in some parts of the coast due to discharges of raw sewage has resulted in visible problems, including localized eutrophication (water pollution caused by excessive plant nutrients) and phytoplankton bloom, as well as less-visible contamination of the marine life by organic and non-organic micro-polluting substances. The Coastal Cities Pollution Control Project is designed to improve the quality of Croatia's Adriatic coastal waters to meet European Union environmental requirements under the acquis communautaire. The project is also designed to preserve one of the country's natural resources and to enhance the potential for further growth in the tourism industry. The project's development objective will be achieved through support for the strengthening of the institutional arrangements for financing and management of wastewater management, wastewater collection, treatment and disposal infrastructure in selected coastal municipalities. The coastal municipalities that have been identified as candidates to participate in the project include Krk, Opatija, Biograd, Zadar, and Rijeka. The project will also provide technical assistance and financing for engineering services, improvements in the environmental monitoring system for the implementation and measurement of results financed under the project. The project supports the National Environmental Action Plan (NEAP), which was recently completed by the Croatian Government with extensive public participation. The Government of Croatia has selected the Adaptable Program Loan (APL), the first time that this instrument is being used in the country. The APL provides a framework for the phased implementation of pollution control programs and implementing the medium-term investment program needed to comply with requirements for EU accession by helping Croatian Waters, the implementing agency for the project, to take a phased approach to planning and identifying funding sources, while building the necessary regulatory, monitoring, and control capacity. The World Bank loan is the first phase of a medium term investment program that is part of a wider 10-year investment program designed to bring Croatia in line with EU wastewater treatment requirements. Since Croatia joined the World Bank in 1993, the Bank has funded 24 projects totaling over US$1.2 billion, with disbursements of over $700 million. For more information on the World Bank's work in Croatia, visit http://www.worldbank.hr